Nobody likes a brown envelope from HMRC landing on their doormat—especially when it comes with a penalty.
The truth is, most HMRC fines are avoidable. They don’t come from deliberate wrongdoing—they come from missed deadlines, poor record keeping, or confusion over the rules.
At Kingston Burrowes, we see it time and time again: smart business owners hit with unnecessary penalties for things that could’ve been easily prevented.
So if you want to stay compliant, save money, and reduce stress, here’s what you need to know—and what you might be overlooking.
1. Late Filing Penalties
What it is:
HMRC issues fines when tax returns—whether personal, partnership, corporation tax or VAT—aren’t submitted on time.
What you might be overlooking:
Even if you don’t owe any tax, you can still be fined for late filing.
- Self Assessment: £100 automatic fine after 31 January
- VAT Returns: £200 fixed penalty for repeated late filing (plus surcharges)
- Corporation Tax: £100 fine after 1 day late, increasing over time
How to avoid it:
- Know your deadlines and mark them clearly
- Submit returns early—even if you pay later
- Use accounting software or a calendar reminder system
2. Late Payment Penalties
What it is:
HMRC charges interest and penalties if you don’t pay your tax bill on time—even if your return was filed correctly.
What you might be overlooking:
Interest starts accruing from the day after the due date—even if you’re only a few days late.
- Self Assessment: 30-day, 6-month and 12-month penalties
- Corporation Tax: Interest charged from the payment due date
- PAYE and NIC: Monthly and quarterly payments must be made on time
How to avoid it:
- Budget throughout the year—not just at tax time
- Work with your accountant to forecast liabilities
- Set reminders for payment as well as filing
3. Poor Record Keeping
What it is:
HMRC requires you to keep clear, accurate, and complete records of your business income and expenses.
What you might be overlooking:
There’s no leniency for “best guesses.” Missing receipts or unreliable spreadsheets can land you in trouble.
- Penalties can apply if your records are judged inadequate
- Investigations are more likely if your figures don’t stack up
How to avoid it:
- Use digital accounting software like Xero or QuickBooks
- Store receipts and invoices securely (digital copies are fine)
- Reconcile your accounts regularly—not just at year-end
4. Incorrect VAT Returns
What it is:
Mistakes in VAT calculations or late submissions can lead to penalties, especially if HMRC believes the error was careless or deliberate.
What you might be overlooking:
Even honest mistakes can be penalised if HMRC thinks they weren’t due care and attention.
- Errors that lead to underpaid VAT can trigger fines up to 30%
- Repeated mistakes can lead to increased scrutiny
How to avoid it:
- Double-check returns before submitting
- Make sure VAT is set up correctly in your accounting software
- Ask your accountant to review anything you’re unsure about
5. Failure to Register or Deregister Correctly
What it is:
Businesses must register for VAT when they hit the £90,000 threshold (2024/25). Likewise, you must deregister if your turnover falls below the limit.
What you might be overlooking:
Missing these thresholds—or delaying action—can result in fines or backdated liabilities.
How to avoid it:
- Track your rolling 12-month turnover, not just calendar year
- Act quickly when you approach the VAT threshold
- Keep your accountant informed of major income changes
6. Not Notifying HMRC of Changes
What it is:
HMRC requires businesses to notify them of changes to address, company directors, trading status, and more.
What you might be overlooking:
Failure to notify isn’t just a formality—it can result in penalties.
How to avoid it:
- Inform HMRC and Companies House promptly of any changes
- Check your records annually to ensure all info is up to date
- Use your accountant to help manage updates
The Cost of Getting It Wrong
Penalties aren’t just financial. They waste time, create stress, and often lead to more scrutiny from HMRC in future. And they’re usually completely avoidable with the right advice and systems in place.
How We Help at Kingston Burrowes
At Kingston Burrowes, we do more than tick boxes. We proactively help clients avoid fines, spot issues early, and stay compliant without the stress.
Whether you’re a sole trader, limited company, or growing business, our team can:
- Set up systems to manage deadlines
- Review your accounts for errors
- Help you understand what HMRC expects
- Handle communication with HMRC on your behalf
Want to Avoid Unnecessary HMRC Penalties?
Let’s make sure nothing slips through the cracks.
Get in touch with Kingston Burrowes for practical, proactive support that saves you money, time, and worry.
Book your free consultation today and take the stress out of staying compliant.
